TMI Blog1965 (12) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... arried about 30 years ago and received certain gifts and presents in cash, which is customary. With that she did pawn-broking business. Accounts are not maintained properly. She has no bank account. Assessed under section 23(3) as below : Rs. Income from businesses estimated ... 3,000 Out of initial capital, in the absence of conclusive proof taken as income from other sources ... 2,000 ------------- Total ... 5,000 ------------- Similar assessment orders were made for the subsequent assessment years, namely, 1954-55 to 1961-62. It is to be noticed, however, that the assessment for the year 1961-62 was heard by a different Income-tax Officer and not by the officer who made the assessment for the years 1953-54 to 1960-61. On February 28, 1963, the appellant received a notice under section 33B of the Income-tax Act, 1922 (hereinafter referred to as the Act). This notice related to the said assessment orders for the years 1953-54 to 1961-62. In this notice it was pointed out that the assessment orders passed by the Income-tax Officer on March 23, 1961, and January 17, 1962, regarding the assessments for the years mentioned above were erroneous, being prejudicial to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome for the assessment years 1953-54 to 1960-61. In the return for the assessment year 1961-62, the address given by the appellant was P-536(57), Raja Basanta Roy Road, Calcutta. In Part III of the return for the year 1960-61, the assessee had given her address as 772, 5 th Road, Sodarpore, Jodhpur. The respondent No. 1 noted that for that reason all the assessments made were without jurisdiction and ab initio void. The. order also dealt with the question of initial capital and also the appellant's claim to have earned income from a pawn-broking business. The appellant's contention regarding initial capital and income from pawn-broking business was also rejected, by respondent No. 1. It was further held that the appellant's husband was a well-known industrialist and business man, who lived in East Pakistan till 1957, that he was the managing director of a company known as Coventry Spring and Engineering Co. Pvt. Ltd., and also a partner of Kankroli Khandsari Mill, Rajasthan. It was found that the investments made by the appellant were in the firms in which her husband was interested. The investment in shares of the said company was of the value of Rs. 30,400 and the investment in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neous, that the Income-tax (Removal of Difficulties) Order, 1962, was ultra vires the Constitution, as the said order was delegated legislation in excess of the power permissible under law and was also ultra vires section 298 of the Income-tax Act, 1961. In dealing with the appellant's said contention regarding section 33B of the Act, Banerjee J. held that, as this point was covered by his judgment in Kalawati Debi Haralalka v. Commissioner of Income-tax, Mr. A. C. Mitra, learned advocate for the appellant, submitted before him that he would not argue that point, but would not give it up so that it might remain open to the appellant to argue the point further. This Bench dealt with the appeal in Kalawati Debi Haralalka v. Commissioner of Income-tax being Appeal from Original Order No. 281 of 1963, and my Lord the Chief Justice dismissed the appeal and upheld the judgment and order of Banerjee J. on the questions raised regarding section 33B of the Act and also rejected the contentions of the appellant in that appeal that the Income-tax (Removal of Difficulties) Order, 1962, was ultra vires the Constitution as the said order was delegated legislation in excess of the limits permis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... air opportunity to those who are parties in the controversy for correcting or contradicting any relevant statement prejudicial to their views." Relying upon these observations, Mr. Bhabra argued that all that his client demanded was a fair opportunity to deal with the materials collected behind her back by the income-tax department. This opportunity was denied to the appellant and for that reason the impugned order clearly violated the principles of natural justice. Mr. Bhabra next relied upon the decision of the Supreme Court in Union of India v. T. R. Varma. The passage relied upon by Mr. Bhabra is at page 117 of the report and is as follows : " The law requires that such Tribunals should observe rules of natural justice in the conduct of the enquiry, and if they do so, their decision is not liable to be impeached on the ground that the procedure followed was not in accordance with that which obtains in a court of law. Stating it broadly and without intending it to be exhaustive, it may be observed that rules of natural justice require that a party should have the opportunity of adducing all relevant evidence on which he relies, that the evidence of the opponent should be ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erials collected by the department regarding her husband's residence in East Pakistan till 1957 and his interest in business in Pakistan. Mr. Bhabra argued that these materials undoubtedly influenced the decision of respondent No. 1 and his client was entitled to an opportunity to rebut the evidence collected behind her back and used against her. Mr. Bhabra, however, sought to distinguish the decision of the Supreme Court in State of Orissa v. Murlidhar Jena, in which it was held that if there was some evidence for the conclusions arrived at by a tribunal, such conclusions could not be condemned by the court in a petition under article 226 of the Constitution. Mr. Bhabra contended that the decision of the Supreme Court did not consider the question if opportunities were given by the Tribunal to a party with regard to materials collected behind a party's back. The question discussed by the Supreme Court was confined to the narrow ground, namely, that if there was some evidence for arriving at the conclusion, the Tribunal's findings could not be challenged on the ground that there was no evidence and that it was not for the court to appreciate the evidence for itself and further th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... address as 772, 5th Road, Sodarpore, Jodhpur. Mr. Meyer next drew our attention to sub-sections (1) and (2) of section 64 of the Act. Sub-section (1) provides that where an assessee carries on a business, profession or vocation at any place, he shall be assessed by the Income-tax Officer of the area in which that place is situate, and sub-section (2) provides that in all other cases an assessee shall be assessed by the Income-tax Officer of the area in which he resides. Mr. Meyer argued that on the appellant's own statement, till the assessment year 1960-61, she was carrying on business at the address given by her in Part III of the return, and, therefore, under section 64(1) of the Act, the Income-tax Officer of jodhpur alone had jurisdiction and the assessment orders made up to 1960-61 were void for want of jurisdiction, as the Income-tax Officer, who purported to make the order, acted without jurisdiction. Mr. Meyer argued that, in coming to this conclusion, and in setting aside the assessment orders up to 1960-61, respondent No. 1 did not act on any information collected by the income-tax department at all. The statements furnished by the appellant herself in the returns mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the appellant's or her husband's residence in East Pakistan. It is true that in the order respondent No. 1 had recorded that the appellant resided with her husband in East Pakistan. That may be or may not be the evidence on which respondent No. 1 acted. It is not for this court, in exercise of its writ jurisdiction, to appreciate evidence on which respondent No. 1 acted. That question is now well settled. If there is evidence which entitles respondent No. 1 to come to the conclusion to which he did, this court will not question the sufficiency of the evidence as it is not sitting in appeal over the decision of respondent No. 1. In our opinion, there were ample materials before respondent No. 1 to come to the conclusion that the assessment orders were made by the two Income-tax Officers without jurisdiction and were, therefore, void. Indeed, respondent No. 1 has made that clear in the impugned order. He has noticed that in the return for the assessment year 1961-62 the address given by the appellant is P-536(57), Raja Basanta Roy Road, and in Part III of the return for the year 1960-61 the appellant gave her address as 772, 5th Road, Sodarpore, jodhpur and relying on these mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entioned by the appellant in the return was P-536(57), Raja Basanta Roy Road, Calcutta. The statements made by the appellant in her income-tax returns could not be ignored or overlooked. These statements must be held to be decisive in determining the question of jurisdiction of the Income-tax Officers to entertain the assessment of the appellant and pass orders thereon. Before passing, I should over again point out that it is not for this court in exercise of the writ jurisdiction to enter into the question of sufficiency of the evidence on which respondent No. 1 came to the conclusion. If there was some evidence to justify the conclusion arrived at by respondent No. 1, it is not for this court to interfere with such conclusion. On the materials in this case there can hardly be any doubt that respondent No. 1 acted on the statements made by the appellant. If, in coming to the conclusion, respondent No. 1 had referred to the appellant's residence in East Pakistan, it cannot be said that the impugned order is bad or void for violation of the principles of natural justice. Mr. Bhabra next contended that the decision of the Supreme Court in State of Orissa v. Bidyabhushan Mohapatr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me to the conclusion that the Income-tax Officer had no jurisdiction on the statements made by the appellant herself. Even if the conclusion can be attacked on the ground of violation of the principles of natural justice because the appellant was not given an opportunity to rebut the allegations regarding her residence in East Pakistan, Mr. Meyer argued, the order of respondent No. 1 could not be condemned or struck down because there were ample materials before respondent No. 1 to hold that the Income-tax Officer had no jurisdiction to make the orders which they did. In our opinion, Mr. Meyer's contentions are well founded. The appellant, it is true, had no notice or knowledge of the fact that the department had collected materials which showed that the appellant for some time resided in East Pakistan. The fact of such residence has been recorded in the impugned order itself. But the question is, can the impugned order be supported and upheld even if the evidence regarding her residence in East Pakistan is completely ignored ? I have already discussed the materials on which respondent No. 1 came to the conclusion that the Income-tax Officers had no jurisdiction to make the order o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant had investments in shares of the value of Rs. 30,400, and in addition she had investments of Rs. 12,500 in the said mill. Respondent No. 1 also found that there was no evidence that the assessee carried on money-lending and pawn-broking business as claimed by her. Referring to these findings of respondent No. 1, Mr. Bhabra contended that no opportunity was given to his client to rebut the materials mentioned above which were collected by the department and were used against his client. He argued that it was clear that, so far as the finding of respondent No. 1 on this aspect of the case was concerned, it was clearly based on materials collected by the department of which no notice was given to the appellant. The evidence so collected, Mr. Bhabra argued, was not disclosed to the appellant or her representative, with the result that the appellant had no opportunity of controverting or at any rate dealing with the same. Mr. Meyer, on the other hand, argued that the order made by respondent No. 1 cannot be said to have been based only on the materials collected by the department and not disclosed to the appellant. There were other cogent materials, Mr. Meyer argued, which just ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is relying on these materials that respondent No. 1 came to the conclusion that the order of the Income-tax Officer could not be sustained and must be set aside. Mr. Meyer argued that there can be no doubt that the Income-tax Officers had completed the assessments post-haste without making enquiries into investments, which, he submitted, should have been made particularly because the returns were filed by the appellant voluntarily and the assessments were made for the first time. The question to be considered is whether the appellant was aware of the grounds relating to the second charge in the notice on which respondent No. 1 proposed to take action. These grounds were that the records showed that the appellant filed returns of income for 1953-54 to 1959-60 all dated March 20, 1961, and for 1960-61 dated March 6, 1961. The dates of filing of the returns for the years 1953-54 to 1959-60 were not recorded, though, with regard to the return for 1960-61, the date of filing the same was recorded as March 17, 1961. Notices under section 23(2) regarding the years 1953-54 to 1959-600 were issued on March 29, 1961, fixing the date of hearing on March 23, 1961, and for the year 1960-61, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amasivayam Chettiar v. Commissioner of Income-tax upheld the use of undisclosed materials by a tribunal on the ground that those materials did not form the basis of the decision. In this case respondent No. 1 had in the impugned order referred to the appellant's investment in various concerns in which her husband was interested and he drew the inference that, even if some loans were advanced in the appellant's name, she was merely a benamidar of her husband who was the owner of the amounts so lent. This inference cannot be treated as a material which has been used against the appellant, but must be treated as an inference drawn by respondent No. 1 from the materials before him. The question of violation of the principles of natural justice by the Commissioner of Income-tax in a proceeding under section 33B of the Act was considered by this Bench in Appeal from Original Order No. 264 of 1963 (Rampiyari Debi Saraogi v. Commissioner of Income-tax). In that case my Lord the Chief Justice, following the decision of the Supreme Court in S. N. Namasivayam Chettiar v. Commissioner of Income-tax, held, on the facts of that case, which so far as this aspect of the question is concerned wer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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